Tuesday, March 31, 2009

One of the reasons why small businesses stay small is because their owner(s) don't take the next critical step. It's very common to see "mom and pops" that, for years, never seem to grow. To the entrepreneur, his/her business is like a child. You want to care for it, make sure it grows, and are deathly afraid of hiring babysitters or allowing it to become more independent.

Most people would be inclined to believe that most businesses fail because there wasn't sufficient demand. While that is true, the opposite is also true. Many businesses out there also fail precisely because there was too much demand and they couldn't keep up. When you can't keep up in running the business you will start to bleed customers very fast, until you eventually end up with something not worth doing anymore or get burnt out.

Listen, you can't grow without help...

There's pills for that!

Huh? Who said that? ;)

On a serious note, unless you empower your business to run itself without you having to be there, it will never reach its full potential. The same goes for children. We also talk about and make fun of "helicopter parents" but the problem is real. There are many "helicopter entrepreneurs" out there.

As an entrepreneur, you need to remember this golden rule:

To grow, you need to automate or delegate. Or do both.

To those of you who are familiar with Rich Dad, Poor Dad by Robert Kiyosaki, he lays out a very important principle. To be financially successful and independent, you need to be able to generate PASSIVE income, not linear income. Linear income is pretty much working a job. You exchange one hour of your time for a set amount of money. Passive income means you collect money without even doing anything.

The linear income dilemma is not just restricted to people working a job though. Entrepreneurs can also get stuck in this trap. Take, for example, that you own a design business. It's pretty much a 1 or 2-man show. However, in order to earn any money, you yourself are hired out by the hour by your client. If you want to grow your business, then this model is unsustainable. During this time that you're hired out, you cannot take on any additional work, which means in the grand scheme of things, you are LOSING money. If you are handling paperwork or other administrative/non-value add tasks...again...you are LOSING money.

For all of you out there who are or want to become entrepreneurs, I want you to say this affirmation to yourself:

I am an entrepreneur. I am a LEADER. I am NOT a Manager.

I want you to take this to heart. A leader is not a manager. A leader brings people together to work for a common goal. A leader sets a strategy and vision for the rest of the organization. Managers are there to make sure everyone's doing their part. Do you think the Chairman of a large company knows every little thing that's going on in the company? Nope, not even close. All that matters at the end of the day is the results. Same goes for a General of an army. They don't manage their army, that's the job of their subordinates. They LEAD their army. I can go on and on with more practical examples, but I think you get the point.

So...assuming your business is making money and doing relatively well, it is time to start distancing yourself from day-to-day operations to focus on greater value-add activities. Yes, some people may argue that hiring people or buying new technology costs money. True, but losing time costs even more.

What kind of activities are non-value add you ask? Here are some common ones:

Customer service - A lot of times, most situations are easily handled by someone else

Micro-managing employees (also called "firefighting") - Let a manager do that if you really insist on it, you should only worry about the results

Accounting (sorry, but it's true) - The more time you spend counting pennies leaves less time for grabbing more

There are many ways to automate or delegate these activities. In fact, way too many to list. There is an abundance of small business software out there that could help automate everything from shipping labels to automatically keeping track of your financials.

To delegate, you should first hire a manager who can run the day-to-day operations of your business. That manager, if they're smart, will then make recommendations on what additional labor needs to be hired in order to make the operation efficient. Think of a manager as the "babysitter". Even with a babysitter, the child knows who to call daddy/mommy. Same goes for your company, everyone still knows you're the owner and the HMFIC (Head Mo'Fugga In Charge)

If you feel your company is not yet ready for a separate non-owner management team, then at least hire the people you need to take care of the non-value add activites of your business. However, give them sufficient independence so that they can grow, and you can focus on growing the business!

The most important activities you need to do as a leader is to bring in new business and set the overall strategy of your company. Focus on passive income. That's how you grow.

Make it your goal to make the only mention of "helicopter entrepreneur" as a reference to you landing your helicopter on the East Side...in that deluxe apartment in the sky.

Saturday, March 28, 2009

The human imagination is very powerful. In truth, all of us have the ability to be "mini-creators." Human beings have the power to take something as fleeting and non-existent as a thought and turn it into something that can be felt, seen or heard...almost as if creating something from nothing. Even as you read this blog, you have witnessed the process of creation. I turned my fleeting thoughts into actual text you can read and react to (...and laugh at sometimes ;) ). Who knows what power this creation ultimately has though? But...that is the wonder of creating things...the wonder of a new frontier.

Unfortunately, we are increasingly living in a world where people can't let their imaginations run wild anymore. We're taught from a young age to stop daydreaming, do our work, learn our manners and please everyone. We are not machines.

I repeat: We are not machines.

Imagination is the essence of artists but also the entrepreneur. Most people dream from time to time...but they never create. What separates an entrepreneur from the rest is that he/she takes those dreams and creates a reality out of them. Most people simply "climb the ladder", climbing to heights that have already been predetermined by other people they don't know.

Entrepreneurs build their own ladders, so they can go as high as their dreams can take them.

Look at all the biggest businesses out there. Every single one of them started out as a fleeting, non-existent thought. If nothing was done, they would have never existed...doomed to die with their creator in a graveyard of dead dreams and broken hopes.

Tuesday, March 24, 2009

In New York City, there was a distinguished English man who, for many years, sold a very simple product: a vegetable peeler. He secured an exclusive distribution agreement with the Swedish company that made them and started to sell their peelers right on the streets. He had no fancy offices, legions of employees nor a big ego. He was a very humble man who knew how to draw a crowd, entertain them and get them to buy his product.

Most would think that this man lived a simple life based on his small cutting board and his very low stool. In reality, the man was a MILLIONAIRE. He lived in an expensive high rise on Park Avenue, was a very distinguished gentleman and a connoisseur of fine arts, wines and music (apparently women too, because he married 4 times). How did he make his fortune? Selling his vegetable peelers.

Most days, he would go to a high-traffic area (i.e. China Town, Times Square, Union Square, etc.) and set up shop. He'd take out his vegetables and start using the peelers. All the while, he'd tell jokes, ask passers-by questions and show how ridiculously easy it was to peel carrots, potatoes and all kinds of vegetables with his peelers. He would sell them for $5 a piece, and often sold out every single time. Even if the weather was cold or hot, he'd be out there (with the exception of snow or rain of course).

He knew how people think, and how to use a crowd to his advantage. When people see a crowd, they stop and look to see what's happening. When people see someone buying, chances are, they're that much more likely to buy too. It's the concept of "Social Proof" where people look to their surroundings to help determine their decision. Some people call it a "herd mentality" as well.

Entrepreneurs can learn from his example. Sometimes, it isn't size that matters. You don't need a giant organization to do what you love or make a good living. You just need a good product or service, motivation, the ability to connect with people and a dream. Remember, at the end of the day, it is how much PROFIT you make that matters. You could be making billions in revenue, but what about if your costs are nearly that high too? Sure, it's good to think big...but it's even better to think smart and simple.

For those who asked him about how he became successful, he had one simple saying:

Saturday, March 21, 2009

Mark my words...a space photo is coming! Consider yourself lucky that I considered two galaxies merging to be way too...hmm...well...damnit that was a good picture... oh well.

Depending on what type of person you are and your idea, having a partner or two never hurts. A business partnership is almost like marriage in a lot of ways (not really sure about polygamy though...)

As explained in previous posts, a good buinsess partner brings the following advantages:

Additional skillsets to build a stronger foundation on which ideas can be brainstormed, or an existing idea built upon

Motivation. When you and your partner(s) are responsible to each other, you don't want to let each other down

Work can get done faster by splitting the burden

Additional start-up capital (if needed)

Bigger network of people to contact that could help your idea fly

Camaraderie (http://www.merriam-webster.com/dictionary/camaraderie) and lasting friendship(s) which are always good

Of course, as with anything, there are disadvantages to note as well:

If your partner is not trustworthy, he/she can steal your idea, spread it to others or try to steal your hard-earned money from your venture

Disagreements are inevitable, especially among dominant personalities. If you don't have the right partner, disagreements can either slow you down significantly, or grind everything to a screeching halt. Many small businesses fail because of unresolved disagreements between its partners rather than poor planning/execution

Depending on your partner, you will have to compromise. If you are a control freak, this is probably a disadvantage for you then

If you're more of the greedy type...then bad news for you, because you'll have to share your profits with your partner. This shouldn't even be a consideration for you though, because starting a venture shouldn't be for the sake of chasing money

You can maximize your advantages and minimize your disadvantages by taking the time to find the right partner for you. Trust is absolutely essential.

What are some signs you need to look out for in finding a good business partner? Here are some from personal experience and the experience of others:

Is your business partner ambitious? What is his/her plans and goals in life?

This factor is important because you want to find someone who is entrepreneurially-minded like yourself. Someone who is ambitious and entrepreneurial will go the extra mile, work hard and take risks to make the venture a reality. Someone who says, "My plan is to get a good paying job in the next 5 years. Blah blah blah." probably isn't the right kind of ambition you want. People like that are stuck in habit and don't mind being "Just Over Broke" You need someone who wants to take the road less traveled and who is serious. Only someone who is ambitious and entrepreneurial will make the short-term sacrifices needed for long-term gains.

Is your partner open-minded and compromising? Or stubborn and authoritative?

This is essential. Having an open-minded partner who can compromise and not stubbornly stick to one line of thought or ideas will go a long way. The more stubborn your partner, the greater the chance you will get into unresolvable disagreements which can destroy the partnership and the venture. If you happen to be the stubborn one, then it is really important you find someone who can effectively compromise with you, otherwise you're asking for disaster by bringing another stubborn partner along.

Does your partner bring needed skills, fresh ideas or motivation that you need?

Sometimes, people need a partner just for motivation. However, in other cases, if a partner doesn't bring anything to the table that you can already do yourself, then why bring a partner along? That's just redundant. You need someone who can bring fresh ideas or skills to the table, otherwise there's no point in having them as a partner.

Can you trust this person?

Sounds like a loaded question. It is. Trust is the single most important factor in not just business, but life itself. To determine if someone is trustworthy, it'll depend on how you know this person, what others say about this person and what your gut feeling tells you. If I could possibly tell you how to 100% tell if someone is trustworthy, then I'd probably write a book about it and win a Nobel Prize in Psychology.

Is your partner one can short of a six-pack and a total dumbass?

What was that? ;)

Last of all, do you "click" with this person?

What I mean by this is that do you enjoy socializing with your business partner? Can you talk about business, but also able to shoot the breeze and have a good time? Partnering with someone you like only serves to strengthen the partnership.

Wednesday, March 18, 2009

Anyway, we were discussing before on how to come up with ideas and research promising ones. However, none of this is possible without proper motivation. A lot of people I've talked to have interesting ideas, but sadly, these ideas are buried or constantly pushed aside due to a lack of motivation.

We are, by design, creatures of habit. We prefer predictability and order in all aspects of our lives. Change and the unknown scares us. That's why successful entrepreneurs are a minority. If entrepreneurship was easy, then everyone would be doing it. However, that is why the rewards of entrepreneurship are potentially great, because it is the path less traveled. A job provides that sort of static predictability. You are given work by your boss, and you collect a paycheck either every 2 weeks or a month. However, remember the golden rule: JOB stands for being "Just Over Broke" There's no shortcut or easy way to anywhere worth going.

As mentioned in previous posts, finding an idea that you believe in and/or enjoy is not just essential in your future success, but also essential in your own self-motivation to see it through. However, sometimes that sort of conviction isn't enough. Often times, people simply daydream day after day of how glorious their idea would be, and eventually realize so much time has passed, and nothing happened.

So, what are some tips to get motivated? Here are some that, from my own experience and the experience of others, work:

If you cannot bring yourself to be self-motivated, find a trusted business partner who can share in the burden of bringing the idea to life. If the both of you are responsible to each other, you'll find yourself motivated not to disappoint your partner. Deep down inside, all human beings have a strong sense of loyalty to those they respect (authority figure), like and/or trust. Use that inner instinct to your advantage! Your boss certainly does!

Join a group that's related to what you want to do. Whether it be a group of like-minded entrepreneurs, social activists or whatnot. By surrounding yourself with the right people, you can bring about powerful change within yourself. Machiavelli once said in "The Prince" that "The first method to estimating the intelligence of a ruler is to look at the men he has around him."

Declare to others of what you intend to do. I know some people where this method was extremely effective in self-motivating themselves. You don't have to tell people what your idea is specifically. Just tell people you're starting a business, and you intend to launch it by so-so date. It's important to give a rough idea of a timeline, because then some people will try and ask you about it later on. No one likes being thought of as a hypocrite or big mouth (well...most people anyway). Use that fear of embarassment...and your ego *COUGH* ;)... to your advantage!

Set a goal and post it up on a wall where you can see it everyday. Let it be a constant reminder that you have something to work for.

Read about success stories of other entrepreneurs. Often times, they are very inspiring. You can also...if you really need to...hire a motivational coach to pump you up and hold you accountable to the goals you set. Mentors are also a great source of inspiration and motivation. Most people do not like to disappoint people they respect.

It's a basic psychological principle that anger is more useful than despair. If you want to improve your life, despair won't get you anywhere. Anger, although usually a negative emotion, is a source of strength and motivation. If needed, put yourself in a kind of mood in where if you had a bazooka, some mo'fugga would say hello to your little friend.

Saturday, March 14, 2009

Ok, I told myself, "They're going to start getting tired of these space photos..." Hey! I can't help it! SORRY!

Continuing from the "Eureka!" piece on March 3rd, now you've got a single idea or maybe two good ones that passed your initial questioning process.

Now the real fun begins. Now that you've identified your idea, now you need to quantify it and see if it's actually worth the time and if there's real demand in the market for such a product/service.

There are four key areas you need to look at to determine the feasibility of your idea, which I will break down more in detail:

Competition - Is your idea already being done by many competitors? If so, what are their strengths and weaknesses?

Market growth and trends - You need to determine if the pie is growing or shrinking. Also, it is essential to determine key consumer and supply trends to determine if there's demand and needed resources to make your business successful

Suppliers (if applicable) - If you're making a product, are there good suppliers out there? If you're marketing a service, can you find the talent needed?

Economic trends and conditions (to start, in your local area first, unless your idea is international, nationwide, or purely on the internet) - This isn't as important as the other 4, but it's useful in solidifying your approach. This category includes government regulations.

Before we delve into these 4 factors, lets go over a list of reliable free resources you can use to do your research:

Trade associations related to the industry you're going into - these guys often provide data and statistics for free (not all of them though)

Trade publications related to the industry you're going into - there are trade publications for literally every industry and subject under the sun. These often have very useful articles and statistics you can use to collect information on the market and your competitors

CALL people up such as industry experts, journalists, etc. and even your competitors! (you just need to be a bit more careful when calling competitors). Usually you can learn A LOT just from talking to people.

Now...here are some PAID resources you can use if you either have the money, or already have access to them through your local library or something.

Factiva/Lexis Nexis - These databases aggregate articles from all major publications nationwide and worldwide)

Marketresearch.com - Often have great market reports with robust statistics and data you can use to determine the market and the strength of your competitors

Business Source Premier (EBSCOHost) - The literal hub of trade magazines and articles - very useful

Dun & Bradstreet - There could be many small businesses in your region that you don't even know about. This database is useful for determining companies' credit ratings and their estimated revenue and employees. Also, a lot of bigger companies conceal the actual number to their corporate headquarters. This database also gives you their direct number in case you want to call them

Trade shows / networking events - Sign up for a bunch and go to them, ESPECIALLY if they're in your area. You can learn A LOT and meet new people who can help you.

Gartner - Only if your venture is IT-focused. These guys are EXPENSIVE though, so try to access them through a library or something.

Author of this blog*COUGH* ;)

Competition

Competition will be one of the most important factors you look into. In order for your new venture to be successful, it must be able to take advantage of the weaknesses of your competitors.

Using your research, you need to be able to answer some key questions about your competitors:

First of all....WHO are your competitors? and WHY? You need to know why, otherwise you might overestimate who your competition truly is. You should only count someone as a competitor if they serve the same demographics and a similar need to your own business.

Let me give a quick example. Lets say, for instance, you're opening up an organic dog food store (I want royalties for that idea if you use it!!! ;) ). As you do your research, you find out that someone else in your area has a store that sells organic food to fish and cats. Is he a competitor? No. Why? Because he doesn't serve the same "demographic" or "needs" as you do. Dogs are not fish or cats, therefore the other store is not competing with you.

Let me give one more quick example to drive the point home. Lets say you're opening up a retirement home for rich, socially inept younger people who don't want to work anymore and who are in their 20's to upper 40's (I REALLY want royalties for that one ;) ). Would you consider a retirement home for the elderly your competitor? No. You don't serve the same demographics or needs as they do. Your demographic is towards younger people. The needs you serve for them are not really health or hospice-related, but rather, probably more for hooking them up with fun activites and new friends.

If your venture is more regionally focused: Who is your competition in your area? and why?

What products/services do they offer, and what is their geographic coverage? (this depends on your idea)

What are their strengths and weaknesses? This is very important because it will determine your angle of attack, if there is one. Your idea must be able to take advantage of your competitors' weaknesses.

Is the market dominated by a few big companies or by many small ones? You can determine this by the market share of your competitors. The more fragmented your market is, the better. It is difficult to enter a consolidated market, and the big guys like to keep it that way. You must understand what kind of barriers to entry you are facing.

What are your competitors currently planning to do? Are there new technologies or product/service lines that they're developing that could threaten your business?

The Market & Trends

Everyone wants a piece of pie. Question is, is there enough pie to satisfy? (hey, that rhymes!). The condition of the market you enter into is essential in determining whether your idea is even worth pursuing.

You need to be able to answer some key questions about your market:

Is it consistently growing or declining? And by how much? Large increases indicate the market is still in its growth stage. Flat growth indicates it is mature, and declines mean the market is dying off. If you enter a mature or declining market, your only chance of being successful is to actually steal market share from your competition, which can be quite difficult. In a growing market however, everyone has room to grow, and there is not yet enough supply to meet demand.

Are there any substitute technologies that might threaten the market? For example, the CD market has been consistently shrinking due to increasing adoption of mp3 players.

What are the consumer trends in your market? Do you see signs of consumers embracing things that are similar to your product/service? Remember, your idea must serve a need or create one. However, you can't do that unless you understand what your future customers are thinking. You need to understand what makes your intended consumers want to buy the products/services in your market. Is it Price? Quality? A mix of both? These things you need to determine.

If you're more regionally focused, then you need to try and figure out the market conditions and trends in your area specifically. For example, you find out that the luxury yacht market is growing overall. However, if you serving somewhere like Mississippi ...chances are you're in for a rude awakening. That area would show a stronger preference towards smaller boats rather than luxury yachts.

Suppliers

Determining the nature of your suppliers and what they charge is essential for when you begin to put everything into numbers. You need to understand this area well in order to accurately predict your costs. You need to answer some key questions:

If you have a product: Are there a few big suppliers or many small ones? This will determine how much leverage and negotiating power you will have with them. What are their prices and lead times? (Lead time refers to how long it takes for them to manufacture and ship the item to you)

How scarce or plentiful is the labor you need? And what is the going market rate for employing them? (you can determine this either by articles or by the Bureau of Labor Statistics) Can you outsource? Sometimes, utilizing a third party is the best way to go, and often more affordable.

If you're providing an outsourced service (i.e. you use another company to serve your customers) - what do they charge? What is their lead time? And what is their quality of service?

What are the different incentives/perks among these suppliers? (i.e. bulk discounts, free shipping, etc.)

WHERE are your suppliers located? (this can apply to both products and services)

Again, this will be essential in determining if you can secure the supplies you need, and also essential for your financial planning. You can't run a business unless you know if you're even making a profit.

Economic Trends & Conditions

Chances are, you will find out more about this subject as you look into the three other categories. Therefore this is the least important of the four. However, it is worth looking into, and you'll want to answer some key questions:

Are there any government regulations in place that could have an adverse or positive effect on your idea? You need to find out about both federal and state regulations. If you're going international, then you should understand any relevant laws of those countries that affect your business. (this is the most important question in this category)

One interesting thing to check is to see if there are any government grants related to assisting in starting a venture like yours. You'd be surprised what regulations are out there that provide incentives for people to start all kinds of businesses.

Has disposable or overall income been on the rise or on the decline for your demographic and geography? What about living costs? (again, this is a plus to have, but not necessarily required)

What is the employment situation for your demographic/geography? The more people that have jobs, the more people that can spend money. (again, this is a plus).

As you do your research, you'll probably come across more questions that what I listed here. Depending on your industry and your idea, there might be specific questions that come up that you will need to answer. Remember, "Luck" is simply when preparation meets opportunity. Do your homework!

And if, from your research, you find out that perhaps your idea isn't as attractive as you thought, SCRAP IT! Base your decisions on facts rather than emotions. If the facts don't support your hypothesis, then it's time to look somewhere else. Many entrepreneurs come up with many ideas that don't fly. The successful ones dump the bad ideas through research, and embrace the good ideas with the proper planning and knowledge. Ultimately though, no matter how many facts you have, you will still need to make a decision based on your gut feeling. Don't get into what some people call, "paralysis through analysis." Get the facts, but then MAKE A CHOICE.

Also, you must remember that it'll eventually come down to numbers if you're planning to start a business with high overhead. If you start a business with very little overhead, then financial projections are not as vital, because you have very little to lose and potentially a lot to gain.

Remember, you can make the numbers say whatever you want. In the end, numbers are there to make sure you're not losing your shirt rather than telling you how rich you're going to be.

If the idea turns out to be good, then the good news is, you have most of the stuff you need to write a solid business plan.

Friday, March 6, 2009

I wanted to interrupt the flow of the posts for today to bring up a very important topic that any aspiring entrepreneur should always embrace...and that is the topic of perseverance. Starting a business is not easy, neither is keeping it going. If it was easy, then everyone would be doing it. However, that is why successful entrepreneurs reap the rewards, because they take the path less traveled.

I met a blind man on the subway the other day. His name is Bob, and he was born blind. Yet, everyday, he has the courage to get on the crowded New York City subway to get to work. He also has a wife and kids too.

As I helped him get into the train, I looked at the face of this courageous man. I asked him, "How do you do it? Getting around I mean." He turned his head to the source of my voice, smiled and said, "Trial and error. Mostly error though" and laughed.

As we talked, I asked him about how he became blind and what he does. He taught me that you really don't need sight to see. Many people out there look but they don't see. Even this blind man was able to live a normal and happy life. He was able to see the good in his situation and in others.

But what he also demonstrated was something all entrepreneurs need to embrace. Perseverance. Even the most legendary of business leaders like Henry Ford failed multiple times before finally succeeding. Like the blind man, it was trial and error for them. Mostly error though.

Because truly, when you enter that newfound frontier of entrepreneurship, you could have the best plan in the world, but you cannot control everything. Like the blind man, sometimes you just need to feel around to make your way through. No one knows all the answers or the right ways to do things. The key is to do the best you can, and not give up. If the blind man gave up on life, he'd have nothing. He wouldn't have his wife and kids, he wouldn't have his friends. He would be a broken shell of a man, who would receive nothing but the half-hearted pity of others.

This is the same for entrepreneurs as well. If you persevere, good things will come. If you give up, nothing will come to you. You will be destined to work for someone else, always wondering what you could have done.

Before his stop came, I asked the blind man, "What would be the first thing you would do if you had sight again?" He smiled and said, "I'd look at my wife and kids." Just before the train door opened, he leaned over and whispered "And then maybe some Playboy magazine after that" and laughed.

Tuesday, March 3, 2009

Space...the final fron... woops... wrong topic ;) The reason you see that picture, is because there are MANY ideas out there, but only few end up shining upon greater scrutiny. It is important to focus, otherwise you'll find yourself never getting off the ground.

Here's a real story to illustrate the point. After about 40 minutes or so of brainstorming in dark rooms (they were separate rooms! Sorry ladies), we came up with a list of about 20 ideas for a new business. We were thrilled. It was one of our first times trying the whole dark room thing out, and it worked great. There's just something about a dark and silent room that just triggers your mind to think and be imaginative. Perhaps it's a subconscious desire for the mind to escape what seems to be emptiness and darkness? Who knows.

After our alarm clocks rang, we stepped out and I started to write our ideas down on a big board, while occasionally taking a deep whiff of my marker. There's just something about markers...anyone ever sniff those markers that actually smell like fruit? That was the best invention since the toilet. Yeah... TAKE THAT sliced bread!

Anyways, I digress...

We were pumped up for sure. We then took those 20 ideas, and filtered them down to 5 ideas, based on four criteria: 1) Can it make good money? 2) Is there a demand for it? 3) Is it resistant to economic cycles? 4) Is it fun? Yes...looking back, those exactly weren't the most accurate criteria to use. Each criterion was scored from 1-5, and we took the top 5 average scores.

Thankfully, we had a mentor. A real business veteran who started successful ventures in the past. We met up with him after we came up with our list. We felt like we could take on the world, that we could revolutionize the way things are done. We gloriously presented him the list of our ideas on our fancy little Excel file and proved to him that we knew how to use the =Average(B1:D1) function.

The one thing I remember the most about that meeting was how red his face got with laughter. In fact, it reminded me of a tomato with glasses and thin hair. Of course, I knew him for a while, so he had a license to laugh...for now...

The first question he asked was, "Guys, do you even have the skill set for these ideas? These are awfully complicated." He was right, we didn't. In fact, one idea we liked a lot would have needed either us or someone else who had deep experience in law enforcement and almost espionage.

Safe to say, ALL the ideas turned out to be just like that nebula above...just floating and as fleeting as gas. Sure, they look nice, but they can't do anything, not like the star in the middle. We hadn't found that shining star in the middle. It was back to the drawing board for us.

So... with that said, how can one go about filtering and focusing on a single idea? Well, there are a number of steps to do this.

1. The first step is to HONESTLY assess yourself and your partner(s) (if applicable):

What skillsets and experience do you have?

How much DISPOSABLE income can you put into a new venture?

Who do you know in your network? Are they trustworthy?

How risk tolerant are you? Although starting a venture is always risky, some ideas are way more riskier than others because of high start-up costs and overhead.

Are you genuinely motivated to start a new venture? You have to have a high level of motivation and will, because starting a venture is not easy, and you need to toughen up to see it through.

2. Once you've identified the base foundation (you and any partners you may have), then you can determine what idea can be built upon that foundation. Like in the previous step, for each idea, you want to ask and answer the following questions:

Do I actually have the needed skills to execute on this idea? If not, can I find someone trustworthy who does?

Trustworthiness is extremely important. Knowledge is power, and power is used. If you are clueless about an idea, then a lot will rest upon the shoulders of the person who has a clue. That gives them a lot of leverage over you...so you need to make sure you bring unique skills that the other person lacks to compensate. You also need to trust that person, otherwise you may find yourself left behind.

What kind of need does this idea meet? What value do you provide? If your only answer is, "well, I think people will find this to be pretty cool." Don't waste your time. It has to bring some sort of value to people.

If a need is met, then there will be demand for it. How much demand, however, will be determined in the next phase. Right now, this is just initial vetting.

Can I actually secure the resources to execute this idea?

I have a personal preference to try and stick with ideas with relatively low start-up costs and overhead. However, there are many successful entrepreneurs who start ventures with high costs and succeed. You just need to be realistic on how much money you can actually secure for yourself and WHERE you're going to get it.

Where will the money from this venture be earned?

Notice that I didn't say "how much" money yet. That comes later. Right now, this is an initial idea vetting phase. What you need to answer in this stage is basically: Do you know how you will earn money from this?

If you can positively answer ALL the questions for any particular idea (i.e. "Yes, I have the skills for this idea" or "Yes, I can find someone, and I can secure the resources" etc.) Then it has some real potential.

Chances are, by putting all the inital ideas through this questioning process, you will end up with very few left or even just one idea. If you end up with none, then don't worry! Just go back to the drawing board. There's nothing wrong with that, it's all part of the process.

Once you've focused on one or two ideas, you're still not ready to execute on it. The next phase now is to do your homework. Now that you've identified the idea, now you need to quantify it through market research to determine its actual feasibility based on FACTS rather than assumptions.

Stay tuned for next episode. We'll discuss how to do homework on your idea to determine - factually - if it's feasible and worth the effort.

Sunday, March 1, 2009

"Whether you believe you can do something or not, you are right."- Henry Ford

As you may have read in the post before, one of the first steps you need to do before starting a business is to think about what interests you first.

The next few posts are going to expand on each and every step. Today starts with finding inspiration. There are a number of ways to do this:

1. One of the best ways I've found is to learn from the example of entrepreneurs who have already made it. Publications like Inc. Magazine are a great source of success stories. In fact, these success stores can often trigger a creative spark and allow you to think of a great idea you never thought of before.

2. Talk to people! Whether it be friends, co-workers or people you meet at networking events or parties. Often times, people are glad to give you ideas...usually because they don't want to do it themselves! Obviously, I'm not saying you should steal ideas from others, that's not cool. Make sure you're not stealing an idea that someone is already working on. Although we live in a jungle, that doesn't mean you have to be one of the apes in it.

3. Sit in silence and just let your imagination run wild. You'll be surprised what your mind can conjure up when you allow yourself to silence your thoughts and distance yourself from un-needed distractions. When you put yourself in the right mindset, you'll find that ideas will come to you rather than the other way around.

4. Closely observe your surroundings. Usually in the chaos of everyday life, we forget to just step back, take a deep breath and notice what's going on around us. You may overhear your friends or even complete strangers say golden things like "God, I wish xyz could be done better" or whatever. Not only that, you may find how things could be done better in the very industry that you work in (if you work at a job).

5. Learn new skills. By expanding your capabilities and horizons, you will most likely develop a great idea....or finally be able to execute on an idea you already had.

6. Approach someone you know who has a great idea and offer to help. You don't always have to be the one who thinks of the idea. If you think an an idea is great, be part of its success! It's much like someone who becomes an entrepreneur through franchising. You don't have to be a grand visionary, you just need to have the determination. Like Edison once said, it's 99% perspiration, 1% inspiration.

7. Keep reading this blog...unless of course my mentioning of taking a dump in your boss' top drawer didn't already give you a business idea related to human resource counseling or waste management ;)

Stay tuned for the next episode. We'll discuss how to organize your ideas and focus on the best one.